IAS 34 Interim Financial Reporting

This Standard is effective for financial statementscovering periods beginning on or after 1 January 1999.
In April 2000, Appendix C, paragraph 7, was amended by IAS40, Investment Property.

Introduction


1   This Standard ('IAS 34')addresses interim financial reporting, a matter not covered in a priorInternational Accounting Standard. IAS 34 is effective for accounting periodsbeginning on or after 1 January 1999.
2   An interim financialreport is a financial report that contains either a complete or condensed setof financial statements for a period shorter than an enterprise's fullfinancial year.
3   This Standard does notmandate which enterprises should publish interim financial reports, howfrequently, or how soon after the end of an interim period. In IASC'sjudgement, those matters should be decided by national governments, securitiesregulators, stock exchanges, and accountancy bodies. This Standard applies if acompany is required or elects to publish an interim financial report inaccordance with International Accounting Standards.
4   This Standard:
(a) defines the minimum content of aninterim financial report, including disclosures; and
(b) identifies the accounting recognitionand measurement principles that should be applied in an interim financialreport.
5   Minimum content of aninterim financial report is a condensed balance sheet, condensed incomestatement, condensed cash flow statement, condensed statement showing changesin equity, and selected explanatory notes.
6   On the presumption thatanyone who reads an enterprise's interim report will also have access to itsmost recent annual report, virtually none of the notes to the annual financialstatements are repeated or updated in the interim report. Instead, the interimnotes include primarily an explanation of the events and changes that aresignificant to an understanding of the changes in financial position andperformance of the enterprise since the last annual reporting date.
7   An enterprise shouldapply the same accounting policies in its interim financial report as areapplied in its annual financial statements, except for accounting policychanges made after the date of the most recent annual financial statements thatare to be reflected in the next annual financial statements. The frequency ofan enterprise's reporting - annual, half-yearly, or quarterly - should notaffect the measurement of its annual results. To achieve that objective,measurements for interim reporting purposes are made on a year-to-date basis.
8   An appendix to thisStandard provides guidance for applying the basic recognition and measurementprinciples at interim dates to various types of asset, liability, income, andexpense. Income tax expense for an interim period is based on an estimatedaverage annual effective income tax rate, consistent with the annual assessmentof taxes.
9   In deciding how torecognise, classify, or disclose an item for interim financial reportingpurposes, materiality is to be assessed in relation to the interim periodfinancial data, not forecasted annual data.
International Accounting Standard 34 Interim FinancialReporting (IAS 34) is set out in paragraphs 1-46 and Appendices A-C. All theparagraphs have equal authority but retain the IASC format of the Standard whenit was adopted by the IASB. IAS 34 should be read in the context of itsobjective, the Preface to International Financial Reporting Standards and the Frameworkfor the Preparation and Presentation of Financial Statements. These provide abasis for selecting and applying accounting policies in the absence of explicitguidance.

Objective


The objective of this Standard is to prescribe the minimumcontent of an interim financial report and to prescribe the principles forrecognition and measurement in complete or condensed financial statements foran interim period. Timely and reliable interim financial reporting improves theability of investors, creditors, and others to understand an enterprise'scapacity to generate earnings and cash flows and its financial condition andliquidity.

Scope
1   This Standard does not mandate which enterprises should be required to publish interim financial reports, how frequently, or how soon after the end of an interim period. However, governments, securities regulators, stock exchanges, and accountancy bodies often require enterprises whose debt or equity securities are publicly traded to publish interim financial reports. This Standard applies if an enterprise is required or elects to publish an interim financial report in accordance with International Accounting Standards. The International Accounting Standards Committee encourages publicly traded enterprises to provide interim financial reports that conform to the recognition, measurement, and disclosure principles set out in this Standard. Specifically, publicly traded enterprises are encouraged:
(a) to provide interim financial reports at least as of the end of the first half of their financial year; and
(b) to make their interim financial reports available not later than 60 days after the end of the interim period.
2   Each financial report, annual or interim, is evaluated on its own for conformity to International Accounting Standards. The fact that an enterprise may not have provided interim financial reports during a particular financial year or may have provided interim financial reports that do not comply with this Standard does not prevent the enterprise's annual financial statements from conforming to International Accounting Standards if they otherwise do so.
3   If an enterprise's interim financial report is described as complying with International Accounting Standards, it must comply with all of the requirements of this Standard. Paragraph 19 requires certain disclosures in that regard.

Definitions
4   The following terms are used in this Standard with the meanings specified:
Interim period is a financial reporting period shorter than a full financial year.
Interim financial report means a financial report containing either a complete set of financial statements (as described in IAS 1, Presentation of Financial Statements) or a set of condensed financial statements (as described in this Standard) for an interim period.
Content of an Interim Financial Report
5   IAS 1 defines a complete set of financial statements as including the following components:
(a) a balance sheet;
(b) an income statement;
(c) a statement of changes in equity showing either:
(i) all changes in equity, or
(ii) changes in equity other than those arising from transactions with equity holders acting in their capacity as equity holders;
(d) a cash flow statement; and
(e) notes, comprising a summary of significant accounting policies and other explanatory notes.

Editorial note: Substituted by improvements project standard IAS 1 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "IAS 1 defines a complete set of financial statements as including the following components: (a) balance sheet; (b) income statement; (c) statement showing either (i) all changes in equity or (ii) changes in equity other than those arising from capital transactions with owners and distributions to owners; (d) cash flow statement; and (e) accounting policies and explanatory notes."
6   In the interest of timeliness and cost considerations and to avoid repetition of information previously reported, an enterprise may be required to or may elect to provide less information at interim dates as compared with its annual financial statements. This Standard defines the minimum content of an interim financial report as including condensed financial statements and selected explanatory notes. The interim financial report is intended to provide an update on the latest complete set of annual financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported.
7   Nothing in this Standard is intended to prohibit or discourage an enterprise from publishing a complete set of financial statements (as described in IAS 1) in its interim financial report, rather than condensed financial statements and selected explanatory notes. Nor does this Standard prohibit or discourage an enterprise from including in condensed interim financial statements more than the minimum line items or selected explanatory notes as set out in this Standard. The recognition and measurement guidance in this Standard applies also to complete financial statements for an interim period, and such statements would include all of the disclosures required by this Standard (particularly the selected note disclosures in paragraph 16) as well as those required by other International Accounting Standards.

Minimum Components of an Interim Financial Report
8   An interim financial report should include, at a minimum, the following components:
(a) condensed balance sheet;
(b) condensed income statement;
(c) condensed statement showing either (i) all changes in equity or (ii) changes in equity other than those arising from capital transactions with owners and distributions to owners;
(d) condensed cash flow statement; and
(e) selected explanatory notes.
Form and Content of Interim Financial Statements
9   If an enterprise publishes a complete set of financial statements in its interim financial report, the form and content of those statements should conform to the requirements of IAS 1 for a complete set of financial statements.
10 If an enterprise publishes a set of condensed financial statements in its interim financial report, those condensed statements should include, at a minimum, each of the headings and subtotals that were included in its most recent annual financial statements and the selected explanatory notes as required by this Standard. Additional line items or notes should be included if their omission would make the condensed interim financial statements misleading.

11 Basic and diluted earnings per share should be presented on the face of an income statement, complete or condensed, for an interim period.
12 IAS 1 provides guidance on the structure of financial statements. The Implementation Guidance for IAS 1 illustrates ways in which the balance sheet, income statement and statement of changes in equity may be presented.
Editorial note: Substituted by improvements project standard IAS 1 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "IAS 1 provides guidance on the structure of financial statements and includes an appendix, "Illustrative Financial Statement Structure", that provides further guidance on major headings and subtotals."

13 IAS 1 requires a statement of changes in equity to be presented as a separate component of an entity's financial statements, and permits information about changes in equity arising from transactions with equity holders acting in their capacity as equity holders (including distributions to equity holders) to be shown either on the face of the statement or in the notes. An entity follows the same format in its interim statement of changes in equity as it did in its most recent annual statement.
Editorial note: Substituted by improvements project standard IAS 1 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "While IAS 1 requires that a statement showing changes in equity be presented as a separate component of an enterprise's financial statements, it permits information about changes in equity arising from capital transactions with owners and distributions to owners to be shown either on the face of the statement or, alternatively, in the notes. An enterprise follows the same format in its interim statement showing changes in equity as it did in its most recent annual statement."

14 An interim financial report is prepared on a consolidated basis if the enterprise's most recent annual financial statements were consolidated statements. The parent's separate financial statements are not consistent or comparable with the consolidated statements in the most recent annual financial report. If an enterprise's annual financial report included the parent's separate financial statements in addition to consolidated financial statements, this Standard neither requires nor prohibits the inclusion of the parent's separate statements in the enterprise's interim financial report.
Selected Explanatory Notes
15 A user of an enterprise's interim financial report will also have access to the most recent annual financial report of that enterprise. It is unnecessary, therefore, for the notes to an interim financial report to provide relatively insignificant updates to the information that was already reported in the notes in the most recent annual report. At an interim date, an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the enterprise since the last annual reporting date is more useful.

16 An enterprise should include the following information, as a minimum, in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report. The information should normally be reported on a financial year-to-date basis. However, the enterprise should also disclose any events or transactions that are material to an understanding of the current interim period:
(a) a statement that the same accounting policies and methods of computation are followed in the interim financial statements as compared with the most recent annual financial statements or, if those policies or methods have been changed, a description of the nature and effect of the change;
(b) explanatory comments about the seasonality or cyclicality of interim operations;
(c) the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence;
(d) the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period;
(e) issuances, repurchases, and repayments of debt and equity securities;
(f) dividends paid (aggregate or per share) separately for ordinary shares and other shares;

(g) segment revenue and segment result for business segments or geographical segments, whichever is the enterprise's primary basis of segment reporting (disclosure of segment data is required in an enterprise's interim financial report only if IAS 14, Segment Reporting, requires that enterprise to disclose segment data in its annual financial statements);
(h) material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period;
(i) the effect of changes in the composition of the entity during the interim period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinuing operations. In the case of business combinations, the entity shall disclose the information required to be disclosed under paragraphs 66-73 of IFRS 3 Business Combinations; and
(j) changes in contingent liabilities or contingent assets since the last annual balance sheet date.